I’d like to see the target voting % increased to 60% as part of @Tobi 's CGP. The proposed adjustment factor seems reasonable to me.
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Created the CGPs, currently under review: Tobikuhlmann/epoch reward parameter changes by tobikuhlmann · Pull Request #237 · celo-org/celo-proposals · GitHub
As a side note: reducing the community share down to 5% will increase validator (and locked celo) rewards right?
@Pinotio.com Yes. They are not ‘increased’ in that sense though, but less downscaled from target by the Rewards Multiplier due to lower overall Epoch Rewards.
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At the moment, I don’t see any merits of modifying any changes to the Community Fund as part of “Increasing Celo Epoch Rewards”.
It should be its own separate discussion. Also, saying that we need to modify community fund due to the capital not being deployed efficiently isn’t realistically aligned with the size of the network and our community.
If you need more proposals for allocation of capital from the Community Fund, I am happy to share proposals that I was going to propose internally to aggressively position Celo as the number 1 protocol from an open-source perspective.
I just don’t see how modifying the community fund allocation helps Celo long term. IMO, Community comes first and all the activities around energizing the Core Community are to encourage more proposals to allocate from the fund. Changing it now seems too early and too reactionary.
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Won’t the Community fund allocation already trend towards zero? Why not wait and let time go by. A larger community fund will allow for more future projects and likely draw more attention.
Is awareness the issue here? The cLabs dev rel team is looking for projects to bring more attention to and this is something we think we can help with.
Added a separate post for the community fund here: Community Fund: CGP 35 and how can we use those funds?
@Yaz @ericnakagawa could you please add you points there again then we can have the discussion in one place
Based on the pretty lively discussion about the community fund (Community Fund: CGP 35 and how can we use those funds? - #12 by Tobi) where new resistance for CGP 35 & 36 (community fund & validator rewards) arose I’d like to follow up here:
Maybe the better decision would be to skip the temporary changes for community fund + validators and only propose dynamic voting yield + target voting fraction of 60%. To accept and closely monitor the epoch rewards downscaling, and start working on revamping the epoch rewards mechanism for better long-term incentives with higher priority.
What do you think @asa @Pinotio.com ?
@Tobi , I certainly support moving ahead with dynamic voting yield + target locked Celo fraction of 60%.
Re validator rewards: I do think it is healthy for us to bite the bullet and try to find a dynamic way to maintain a healthy validator nature - rather than kicking the can by increasing rewards. However, I think we need to do this soon (at latest by end of 2021) so that we ensure compensation for validators makes sense.
Re Celo governance fund: Yes, I think delaying changes and prioritising the clarification of names and creating a working group around outreach is wise. I also think we should consider a governance proposal by the end of 2021 to reduce rewards unless we see improvements in uptake.
Following yesterday’s governance meeting, I have put together a write-up of how I see the status and future for Celo Epoch Rewards: DeFi Governance Weekly - Aug 6th 2021 - A Focus on Celo
BTW, thanks @Tobi for the good work preparing and presenting yesterday.
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After some reflection and weighting the good arguments on both sides after yesterday’s governance call I’d like to move forward with a compromise for CGP 35 and 36:
- Propose to reduce the Epoch Rewards Community Fund share from 25% to 15%.
- Withdraw CGP 36: Increasing validator rewards
A couple of more thoughts can be found in the above links.
For everyone who couldn’t participate in Governance Call 9, you can find the recording and notes here Celo Governance Call 9 · Issue #242 · celo-org/celo-proposals · GitHub as well as my presentation slides here Epoch Rewards CGPs: 33, 34, 35 ,36 - Google Slides.
I think there has been a lot of interesting points made and there seems to be general opposition to reducing the community fund share, however I would love to hear from these folks how else we should reduce CELO emissions right now given that we are overspending.
IMO, voter rewards should decrease as I believe a very large percentage of staked CELO is in the hands of “insiders” and not too many of eventual target stakeholders like retail or Celo target users are really currently earning the yield. Put differently, current “insider holders” (including myself) are earning outside yield at the expensive of future CELO holders.
Of course this is just speculation, but I do not believe that current voting patterns are at risk even with a significant reduction in yield. I don’t know concretely, but I wouldn’t be surprised if a significant percentage of locked CELO has no practical alternative as it is locked up in ReleaseGold contracts anyways.
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I agree with that. However I currently think decreasing voter rewards would be risky, as I see the following ‘unlock’ pressure evolving:
- Growing DeFi ecosystem on CELO: More and more higher yield opportunities are competing with locking CELO for voting
- Vesting: No (or few) CELO from the release contracts has been vested so far. As soon as CELO vests, I see the risk of CELO unlocking for selling on the market or using for other higher yield opportunities
I think it’s impossible to predict how the fraction of locked CELO will evolve, that’s why the protocol has the dynamic adjustment, to find a good market price for a given voting fraction over time.
My reasoning is based on the assumption that >50% should be locked for the security of the network. With currently 60% there’s not too much room, and larger means more secure. On the other hand, locked CELO fraction has only increased so far, even with a decreasing realized voter reward rate.
@thezviad mentioned less CELO locked would be beneficial for the network in terms of a lower validator election treshold as well as more liquid CELO to be used elsewhere in the ecosystem. (Community Fund: CGP 35 and how can we use those funds? - #24 by thezviad)
I agree this is desirable, however think this should rather be achieved via staking derivatives and liquid staking rather than lowering the security treshold? Once liquid staking is supported on CELO, staking reward rate could be securely lowered by much I think.
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Where is the assumption for >50% coming from? Also, there is huge amounts of CELO in the reserve too, so those shouldn’t really be taken into calculations probably.
Current locked CELO is ~330 million. Current total CELO without reserve is ~530 million. So 50% of that would be ~265 million. So we could have close to 65 million CELO unlocked and still be at that 50% threshold.
However, I would even question that 50% threshold. Would network really be materially any less secure if total locked CELO was at 200 million instead of current 330 million?
Also re: RG contracts, amount in RG has decreased pretty significantly. Total unreleased amount is at ~160 million only. So I am not sure if it will have such a drastic effect even when all of the gets released over time.
This doesn’t seem correct. One year ago unreleased CELO in RGs was close to 250 million. Today it is at ~160 million. Note that people might keep their unreleased CELO still in RG but they are already liquid even if it remains inside RG. So over last year, the actual illiquid RG CELO has decreased by close to 90 million CELO.
Where can you look up the numbers? Didn’t know that much was released already, taking that argument back then.
Never really questioned that number. My assumption is coming from the initial target parameter of 50% and the sentiment above that that number could be higher. And reserve CELO holdings are excluded for those calculations.
Of course it is hard to be right here, but my personal intuition is inline with zviads as in we are overspending for security. Of course a higher target is better for security, and maybe famous last words, but given the current environment I find it hard to believe that we would meaningfully compromise security by reducing yield or even the target. If alternative yield sources create pressure that jeopardizes security, we can always increase the target again.
Good discussion @thezviad, @nambrot , @Tobi .
Note that at 60% locked CELO, this means an attacker would have to own 30.1% of total outstanding CELO to launch an attack.
I’m not sure if this is a good way to think about security, but I think it’s instructive to consider the approach of Ethereum 2.0 vs Celo. I have done that in more detail here.
How did you come to 30.1% of total outstanding CELO?
In your link it says ‘For both Celo and Ethereum 2.0, attackers need to own 51% of total locked/staked tokens to gain control of either network.’
Aren’t the attack thresholds for Celo different than a 51% attack? Isn’t it 1/3 for stalling and 2/3 for taking over. For stalling with 60% locked CELO before an attack it would be 30% of total outstanding tokens, as (30pp / 60pp + 30pp) = 1/3 I think
Hi @Tobi , my numbers are based on the assumption that an attacker needs to control 51% of locked CELO. If 60% of outstanding CELO are locked, this would mean an attacker needs to own over 30% of outstanding CELO in order to attack.
I may be wrong that 51% of locked CELO is the right attack threshold. Appreciate if you could link an article on where I can learn more about attack thresholds, thanks.